When Does Zealous Advocacy Put Lawyers at Risk of a Defamation Suit?

One of the bedrock principles upon which the American civil and criminal justice system is founded is the notion that the truth will reveal itself through the adversarial exploits of two opposing attorneys vigorously and zealously advocating for their respective clients’ interests.

Inevitably, then, vigor and zeal will sometimes manifest in the form of an attorney’s defamatory statements about an opposing party. Defamation law has evolved to protect certain statements made by overzealous advocates in an effort to avoid unduly restraining lawyers in their efforts to act with an appropriate level of vigor and zeal.

It is fitting that New Orleans, the site of this country’s grandest celebration of reckless excess and redemption, served as the backdrop for a panel discussion of the competing tension between attorneys’ ethical responsibilities to their clients and their own possible tort exposure.

The program took place April 28 during the Spring 2016 National Legal Malpractice Conference, sponsored by the ABA Standing Committee on Lawyers’ Professional Liability.

Elements of a Defamation Claim

Moderator C. Lawrence Orlansky, of Stone Pigman Walther Wittmann LLC in New Orleans, said that although the elements of the tort differ from state to state, in general there are four elements to a defamation claim:

• a false and defamatory statement;
• communicated to a third party;
• with the requisite degree of fault; and
• causing injury to the plaintiff.

Truth is a universal defense to a defamation claim.

Panelist Richard A. Simpson, of Wiley Rein LLP in Washington, illustrated this point via the example of a recent jury verdict in a defamation lawsuit filed in Fulton County, Ga.

The suit ensued after a lawyer followed the filing of a lawsuit against a natural gas provider with a press release in which he stated that his client’s opponent deceived, cheated and misled gas-needy customers, including the lawyer’s clients, by taking advantage of apparent gas shortages in the aftermath of Hurricane Katrina.

The gas provider won summary judgment in the underlying litigation, and then sued opposing counsel for defamation. The jury rendered a verdict in favor of the lawyer, apparently concluding that although the gas provider was not liable to the lawyer’s clients, the lawyer’s statements about the gas provider were true.

Different degrees of fault are required depending on the jurisdiction and the nature of the defamation claim.

For instance, although an ordinary plaintiff typically may pursue a defamation claim based on the utterer’s simple negligence, a public figure must prove that the allegedly defamatory statement was made with actual malice, which requires knowledge or reckless disregard of the falsity of the statement.

Although one generally may not recover in defamation without sustaining an injury, some jurisdictions permit a plaintiff to recover absent any damages under a theory of defamation per se. There is no universal definition of what constitutes defamation per se, though many jurisdictions will consider statements that imply the commission of a crime or one’s lack of chastity, or which tend to injure one’s trade or business, to be defamation per se.

Opinion or Fact?

As a general proposition, statements of fact may be actionable where statements of opinion may not. However, “just because a statement is one of opinion does not mean it is not actionable,” according to panelist Anne C. Auten, senior claims counsel with Attorneys’ Liability Assurance Society Inc. in Chicago.

This caveat has particular relevance when considering defamation in the litigation context. Auten explained that statements of opinion implying that the speaker has knowledge of undisclosed, defamatory facts may be actionable.

She referenced an opinion in which a court found actionable a law firm’s statements that a local judge was “partial to young men in tight shorts and chiropractors,” because the statement implied that the law firm had particular, nonpublic knowledge of the judge’s proclivities.

Auten, citing a Colorado federal district court decision in Seidl v. Greentree Mortgage Co., 30 F. Supp. 2d 1292 (D. Colo. 1998), reflected that accusations of fraud might be protected if found to be “rhetorical hyperbole.”

In Seidl, a lawyer representing a mortgage company against claims relating to spam e-mails made accusations of misappropriation and fraud in a demand letter to the opposing party. The court concluded that the accusations were nonactionable rhetorical hyperbole, as reasonable persons would understand the letter to have been a mere step in the litigation process.

Orlansky stressed that attorneys should be hesitant to rely upon a rhetorical hyperbole defense when considering making a statement of the sort at issue in Seidl, as a court could very well conclude that such a statement is one of actionable fact.

An Attorneys’ Best Defense

The absolute litigation privilege provides a strong defense to certain defamation claims based on attorneys’ statements in the context of litigation. The litigation privilege protects otherwise defamatory statements that are “pertinent” to the litigation proceedings.

As Simpson explained, the purpose of the absolute litigation privilege is that attorneys should “feel free to zealously advocate for clients without fear of retribution.” Or, as Orlansky added, it exists because “lawyers should have some degree of comfort regarding what [they] say in pleadings.”

The test to determine whether the absolute litigation privilege applies to statements a lawyer makes in connection with litigation is whether the statements are relevant or pertinent to the proceedings. Orlansky said the tests for relevance and pertinence have been “very broadly defined.” There must be a logical connection between the statement and the litigation.

When applicable, the absolute litigation privilege provides a general bar to any claim of defamation, even those based on maliciously made statements of facts known to be false.

Although the privilege may provide broad protections, it has its limitations. Simpson said the privilege may not apply to statements made in the context of witness interviews, even those relating to ongoing litigation. Courts have reached inconsistent opinions on this issue.

Simpson also said the privilege is unlikely to apply to communications with the media. Many courts have held that sending a complaint to the press is not protected, even though the filing of the complaint would be. When asked by Orlansky whether the answer would change if the press obtained the complaint and asked the attorney to comment, Simpson opined that the privilege would not apply.

Insurance Coverage Implications

Panelist David Rock, an assistant vice president of the North American Claims Group for Allied World Insurance Co. in Farmington, Conn., discussed the insurance coverage implications of defamation claims.

He told attendees that defamation claims “raise all sorts of coverage issues” under legal professional liability policies.

Most such policies cover only claims arising out of “legal services.” Insurers will almost always reserve their rights on the basis that the alleged defamation occurred outside the provision of legal services, but rarely deny on this basis. However, there are obvious instances in which there would be no coverage and a request for defense and indemnification would likely be denied, such as where an attorney makes negative comments about a current or former partner.

Intentional and wrongful acts exclusions are often implicated, but rarely provide a basis for denial.

As Rock explained, in most jurisdictions a defamation claim requires neither malice nor intent. Because the litigation of the defamation claim often does not involve a finding whether the defamatory statement was made with malice or intent, there may be no practical manner by which to determine whether a finding of defamation was based on malicious or intentional conduct.

Although an insurance carrier may seek to intervene in the litigation to request that the jury be asked to make an explicit finding as to intent, this will not necessarily be permitted. Orlansky said the exclusion most likely applies where punitive damages are awarded and the jurisdiction requires malice or intent for such an award.

Rock articulated other fact-specific exclusions, such as the business enterprise exclusion, which would preclude coverage for defamation occurring not in the course of the provision of legal services but in marketing or other business-related activities.

Defamation taking place within the context of a dispute between partners or co-insureds would also likely be subject to an exclusion. Most policies exclude from coverage awards for punitive damages.

Settlement of defamation claims often adds further complexity from the carrier’s perspective.

Defamation claims are often high-profile, emotionally charged matters. Although the carrier may want to settle, the insured attorney may want to litigate the claim to its fruition to defend his or her reputation. The insured attorney has considerable power to control the decision whether to settle by virtue of the insured’s rights under a “consent” clause.

The presence of counterclaims may further complicate matters for the insurer in such situations. Although the insurer may want to take the rather drastic step of invoking a “hammer clause” in the policy and overriding its insured’s refusal to offer consent, the presence of a counterclaim may have the effect of preventing the carrier from dictating whether to settle because the insured’s own claim is implicated in any such settlement negotiations.

Be Cautious!

The panelists arrived at a common closing point: Attorneys should be careful about what they say.

Auten reminded the audience that couching as statement with the language “in my opinion” does not necessarily provide protection from a defamation claim, even in the litigation context. Rock emphasized the importance of reading and understanding your policies of insurance, as well as those of your clients.

Simpson acknowledged that “sometimes in representing a client you have to have strongly worded pleadings or you have to go to the press.” He added, however, that “if you are acting prudently, as good lawyers do, defamation is not a huge risk.”